US FCC Looking Into Consumers Who Can't Buy Hot Phones
July 30 2009 - 9:30PM
Dow Jones News
The Federal Communications Commission's inquiry into exclusive
carrier deals on popular cell phones will focus on rural areas and
consumers who don't have the option of buying Apple Inc.'s (AAPL)
iPhone or Palm Inc.'s (PALM) new Pre smart phone, FCC Chairman
Julius Genachowski said Thursday.
The FCC is looking for consumers who "live in markets that
aren't served by a carrier that has an exclusive arrangement,"
Genachowski said in an interview with Dow Jones.
AT&T Inc. (T) has a multi-year deal to offer the iPhone, and
Sprint Nextel Corp. (S) is the exclusive provider of the Pre.
Genachowski is concerned about people who can't buy gadgets like
the iPhone or the Pre because the sole carrier that markets the
phone doesn't offer service in their areas.
Exclusive agreements between carriers and manufacturers of hot
phones have ignited lawmakers, consumer groups, and smaller
companies that argue they can't compete with large incumbent phone
companies.
Telecom giants like Verizon Wireless and AT&T argue that
exclusive handset deals prompt innovation by forcing competitors to
forge their own agreements with manufacturers and come up with
newer and fancier phones. Verizon Wireless is a joint venture of
Verizon Communications Inc. (VZ) and Vodafone Group PLC (VOD).
The FCC also is asking whether such exclusive handset deals are
"promoting or hindering innovation" in the wireless sector,
Genachowski said.
How the FCC determines what spurs innovation in the handset
market will be closely watched in the industry. Genachowski
wouldn't elaborate except to say the FCC would "identify the
appropriate metrics to measure and reach some views on that
question."
Public Knowledge Communications Director Art Brodsky said
regulators don't need data to determine whether handset deals are
harmful. "In an ideal world, everybody should have access to every
handset," he said. "This is not a data driven exercise. This is a
consumer choice exercise."
Advocates like Brodsky will cry foul if the FCC doesn't make
such a bold judgment and decides, instead, to focus on rural areas
where AT&T or Sprint don't offer service. Carriers - which have
deep lobbying pockets - will kick up a similar fuss if the FCC
tries to do away with exclusive handset deals.
Genachowski has pledged, for his part, to focus on the everyday
cell phone user. "We have an agenda of protecting and empowering
consumers," he said.
The FCC's inquiry also could subject carriers and handset
manufacturers to uncomfortable questions about subscribers,
pricing, or distribution of their products. Telecom companies have
a history of balking at those requests, fearing their data could be
used by competitors.
Genachowski has vowed to make the FCC "data-driven" and
"fact-based," and his data-gathering strategy will extend to the
agency's examination of exclusive handset deals.
-By Fawn Johnson, Dow Jones Newswires; 202-862-9263;
fawn.johnson@dowjones.com